What is Numeraire ?
Numeraire (NMR) is a hedge fund-like programme that enables users to trade stocks on the Ethereum blockchain. The concept is that users may make trades based on artificial intelligence and forecasts provided by a worldwide network of data scientists who utilise blockchain technology.
Numerai, the business that launched Numeraire, was formed in 2015 in San Francisco, California, by Richard Craib. They raised $21.5 million in four distinct investment rounds running from April 2016 to June 2020.
NMR, Numeraire’s native digital token, is required to stake on tournament results, perform payments, and compensate tournament players.
Who Created Numeraire?
Numerai, the company that created Numeraire, was founded in San Francisco, California in 2015 by Richard Craib and was financed through four separate funding rounds spanning from April 2016 through June 2020, raising a total of $21.5 million. Some notable investors include Union Square Ventures, Paradigm, Placeholder, and Howard Morgan, founder of Renaissance Technologies.
In 2017, the Numeraire token (sometimes referred to as a coin) launched on Ethereum mainnet without an Initial Coin Offering (ICO), rather Numerai issued one million NMR tokens to 12,000 data scientists based on past contributions in Numerai Tournaments.
Primary features of Numeraire
Numeraire offers two distinct apps geared toward different sorts of traders:
- Signals : A channel for submitting stock market techniques that promote a particular stock or trading style
- Tournament : A weekly tournament where users submit trading algorithms about the stock markets, enabling anybody to wager on the most probable conclusion
- The ecosystem is built on the Erasure protocol, a collection of smart contracts on the Ethereum blockchain. It enables Numerai to reward users who staked their NMR tokens correctly or destroy them if they were incorrect.
- Numerai employs an artificial intelligence aggregation model, dubbed a “meta model,” that includes all the predictions received from its application network’s members.
How Does Numeraire Work?
Numerai operates an artificial intelligence aggregation model, called a “meta model”, that incorporates all the predictions it receives from participants in its application network.
The hedge fund then algorithmically trades equities in the stock market based on this model, and also allows any user accessing its network to use its models by accessing its suite of products.
Numerai Tournament
Numerai Tournament is a weekly contest hosted by Numerai that collects market predictions from data scientists and pays out NMR tokens.
In order to participate, users submit their predictions pertaining to a dataset through a staking mechanism, and the predictions are subsequently analyzed and scored based on their accuracy.
Participants who staked NMR tokens to the correct prediction will earn newly minted NMR tokens, and, if not, the staked NMR will be burned, or permanently destroyed.
Of note, while there are contests held each week, the scoring and payout period occurs every four weeks.
Numerai Signals
Numerai Signals is an ongoing application hosted by Numerai where participants upload stock market predictions for a chance to earn NMR tokens.
In practice, users submit a signal reflecting a trading strategy on one of the 5000 stocks available in “Numerai’s stock universe.” While the underlying data used to generate a signal may be different, such as P/E ratios, RSI, or social media sentiment, the signals themselves are submitted in the same format: stock tickers and numerical target values.
Once submitted, participants are scored and rewarded similarly to Numerai Tournament, where target predictions determine whether a user will either be rewarded in NMR or their stake will be burned.
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